THE SOCIAL SECURITY ACT

Republic Act No. 1161, as amended

current law:
Republic Act No. 8282 (1997) or An Act Further Strengthening the Social Security System Thereby Amending for this
Purpose, Republic Act No. 1161; as amended, otherwise known as the Social Security Law

AGRARIAN REFORM LAW AND SOCIAL LEGISLATION

Atty. Daniel C. Gutierrez

Bondoc, Christopher D.
Cañamaque, Reena Mae Q.
Cañon, Vince R.
Tolentino, Faith Claire J.

OBJECTIVE OF THE LAW

(RA 8282, Sec. 2) Declaration of Policy.

It is the policy of the Republic of the Philippines to establish, develop, promote and perfect a sound and viable tax-
exempt social security service suitable to the needs of the people throughout the Philippines which shall promote social
justice and provide meaningful protection to members and their beneficiaries against the hazards of disability, sickness,
maternity, old age, death, and other contingencies resulting in loss of income or financial burden. Towards this end, the
State shall endeavor to extend social security protection to workers and their beneficiaries.

OBJECTIVES OF SOCIAL SECURITY CAN BE SUB-SUMMED UNDER 3 CATEGORIES:

1) Compensation
2) Restoration
3) Prevention

1) Compensation

– It ensures security of income. It is based on this consideration that during the period of contingency of risks, the
individual and his/her family should not be subjected to a double calamity – deprivation and loss of health, limb, life, or
work.

2) Restoration

– It connotes cure of one’s sickness, reemployment so as to restore him/her to earlier condition. In a sense, it is an
extension of compensation.

3) Prevention

– It implies to avoid the loss of productive capacity due to sickness, unemployment or invalidity to earn income. It is
designed with an objective to increase the material, intellectual and moral well-being of the community by rendering
available resources which are used up by avoidable disease and idleness.

- The term “social security” is all embracing.

- The scope of social security is, therefore, very wide.
- It covers the aspects relating to social and economic justice.
- The enactment of the Social Security Law is a legitimate exercise of police power.
- It is in full accord with the constitutional provisions on the “promotion of social justice to insure the well-being and
economic security of all the people.”
THE SOCIAL SECURITY LAW IS NOT A LAW ON SUCCESSION

- In case of death of a covered member, it is not the heirs who are to receive the benefits but the designated beneficiaries.
- The heirs are entitled to benefits only when the beneficiary is the estate, when there are no designated beneficiaries, or
when the designation of the beneficiary is void.

WHO CAN BE DESIGNATED AS BENEFICIARIES UNDER THE LAW

1) Primary Beneficiaries

a. dependent spouse (until he or she remarries)

b. dependent legitimate, legitimated, or legally adopted, and illegitimate children.
*dependent illegitimate children shall be entitled to:
-50% -- of the share of the legitimate, legitimated, or legally adopted children
-100% -- if there are no dependent legitimate, legitimated, or legally adopted children

2) Secondary Beneficiaries

a. dependent parents
b. any person designated by the member as his/her secondary beneficiary
*dependent parents will be considered as beneficiaries only when there are no primary beneficiaries.
*the member can designate any person as secondary beneficiary only when there are no primary or
secondary beneficiaries.

SOCIAL SECURITY LAW IS NOT PART OF THE TAXATION SYSTEM

- Its purpose is not for raising revenues but for the promotion of the general welfare.
- The funds contributed to the System belong to the members who will receive benefits, as a matter of right whenever the
hazards provided by the law occur.

THE FUNDS OF THE SOCIAL SECURITY SYSTEM ARE PRIVATE FUNDS

The funds are merely held in trust by the Government for the Social Security System members.

Thus, the inclusion of religious organizations under the coverage of the Social Security Law does not violate the
Constitutional prohibition against the application of public funds for the use, benefit or support of any priest who may be
employed by the church. Payment of retirement, death, or disability benefits to a priest does not constitute a violation of
the Constitution, because such payment was made not because he us a priest but because he is an employee.

COMPULSARY COVERAGE

(RA 8282, Sec. 9-A) Compulsory Coverage of the Self-Employed.

Coverage in the SSS shall also be compulsory upon such self-employed persons as may be determined by the Commission
under such rules and regulations as it may prescribe, including but not limited to the following:

1) Self-employed persons

- professionals
- partners and single proprietors of businesses
- actors and actresses, directors, scriptwriters, and news correspondents (who do not fall within the definition of
the term “employee” in Section 8(d) of this Act)
- professional athletes, coaches, trainers, and jockeys
- individual farmers and fishermen
2) All employers

3) All employees (not over 60 years of age)

4) Domestic helpers

5) Aliens employed in the Philippines

Unless otherwise specified herein, all provisions of this Act applicable to covered employees shall also be applicable to the
covered self-employed persons.

VOLUNTARY COVERAGE

(RA 8282, Sec. 9(a), (b), and (c))

The following may be covered by the Social Security System on a voluntary basis:

1) Spouses – who devote full-time to managing the household and family affairs
2) Filipinos recruited by foreign-based employers for overseas employment

EMPLOYEES NOT COVERED BY THE SOCIAL SECURITY SYSTEM

(RA 8282, Sec. 8(j))

The following employees are not covered by the Social Security System:

1) Purely casual employees - whose job is not for the purpose of the business of the employer
2) Employees serving on an alien vessel, when such vessel is outside of the Philippines
3) Employees of the Philippine government or any of its instrumentalities and agencies (because they are under
the GSIS; SSS is for private employees)
4) Employees of foreign governments or international organizations, or their wholly-owned instrumentality
5) Such other services performed by temporary and other employees which may be excluded by regulation of the
Commission

EFFECTIVE DATE OF SOCIAL SECURITY SYSTEM COVERAGE

(RA 8282, Sec. 10)

Employers – on the first day of his operation

Employees – on the first day of his employment

Self-Employed – upon his registration with the Social Security System

OBLIGATIONS OF EMPLOYERS

- To report his employees for coverage (Sec. 24-A)

- To deduct from the employee’s monthly salary the employee’s contribution (Sec. 18)
- To pay the employer’s share in the Social Security System premium contribution (Sec. 19)
- To remit the premium contribution to the Social Security System within the first 10 days of each month (Sec. 22)
EFFECTS OF FAILURE TO REPORT AN EMPLOYEE FOR COVERAGE

(RA 8282, Sec 24)

If the employee becomes sick, disabled, retires, or dies, the employer is liable to the Social Security System for damages
equivalent to the benefits to which said employee would have been entitled had his name been reported on time;

In case of pension benefit, the employer is liable to the Social Security System for damages equivalent to whichever is
higher between:

a. The accumulated pension due as of the date of settlement of the claim

b. To the five years’ monthly pension, including dependents of monthly pension

*The employer is not liable for damages if the contingency occurs within 30 days from the date of employment

*The principal is subsidiary liable with such contractor for any civil liability incurred by the latter under the law.

EFFECT OF FAILURE TO REMIT PREMIUM CONTRIBUTIONS

In addition to criminal liability, the employer shall be liable to pay:

1) The contributions, plus

2) Three percent (3%) penalty per month from the date the contribution fell due

UP TO WHEN CAN EMPLOYEE BE OBLIGED TO PAY PREMIUM CONTRIBUTIONS

(RA 8282, Sec. 11)

Only during the term of employment of his employee

When the employee is separated from employment, the employer’s obligation to pay contribution SHALL CEASE at the
END OF THE MONTH of separation

IS SELF-EMPLOYED MEMBER (WHO DOES NOT EARN ANY INCOME) OBLIGED TO PAY PREMIUM CONTRIBUTIONS?

(RA 8282, Sec. 11-A)

If the self-employed member realizes no income in any given month, he shall not be required to pay contributions for that
month

BENEFITS UNDER THE SOCIAL SECURITY ACT OF 1997

1) Maternity Leave Benefit

2) Sickness Benefit
3) Permanent Total Disability Benefit
4) Permanent Partial Disability Benefit
5) Retirement Benefit
6) Death Benefit
7) Funeral Benefit
MATERNITY LEAVE BENEFIT

Female Social Security System members, married or unmarried who give birth or suffer abortion or miscarriage are
entitled to maternity leave benefit.

Conditions:

a. Payment of AT LEAST 3 MONTHLY CONTRIBUTIONS in the 12-month period immediately preceding the
semester of her childbirth, abortion or miscarriage; and

b. NOTICE TO EMPLOYER about the pregnancy and the PROBABLE DATE OF CHILDBIRTH

Limitations on its Enjoyment:

a. Can be availed of only for the FIRST 4 DELIVERIES OR MISCARRIAGES

b. Cannot be availed IF TOGETHER WITH SICKNESS BENEFIT

Duration:

a. Sixty (60) days - normal delivery

b. Seventy-eighty (78) - cesarean delivery

Procedure:

The employee should notify her employer of her pregnancy and the probable date of her childbirth which notice shall be
transmitted to the SSS.

The employer shall advance the payment within 30 days from the filing of the maternity leave application.

The SSS shall reimburse the employer the amount paid upon receipt of satisfactory proof of such payment and legality
thereof.

Rate of Maternity Leave Benefit

- The rate of maternity leave benefit is 100% of the average daily salary credit

Meaning of “average daily salary credit”

- Average daily salary credit is the quotient of the sum of 6 highest monthly salary credits in the 12-month period
immediately preceding the semester of contingency divided by 180.

SICKNESS BENEFIT

Nature of Sickness Benefit

- It is not a payment for the hospital or medical treatment but they are daily case allowances to help carry through the
employee and his family during his confinement.

How much is the Daily Sickness Benefit?

- Equal to 90% of the average daily salary credit for each day of compensable confinement or fraction thereof, and it begins
at the first day of confinement.

Conditions:

a. Payment of AT LEAST 3 MONTHLY CONTRIBUTIONS in the 12-month period immediately preceding the
semester of sickness;
 b. CONFINEMENT FOR MORE THAN 3 DAYS in a hospital or elsewhere with the approval of the Social
Security System;

c. EXHAUSTION of paid company sick leave benefit;

d. NOTICE TO EMPLOYER (of the Social Security System, in case of self-employed members) of the fact of
his sickness or injury within the 5 calendar days after the start of his confinement

Limitations:

a. Maximum of 120 DAYS in one calendar year

b. UNUSED PORTION of the 120 days of sickness benefit CANNOT BE CARRIED FORWARD AND ADDED to
the total number of compensable days allowable in subsequent year; and

c. Shall NOT BE PAID FOR MORE THAN 240 DAYS on account of the same confinement

The Sickness Benefit will be advanced by the Employer

The employer will advance the sickness benefit of the employee. The amount advanced by the employer will be
reimbursed by the Social Security System under the following conditions:

1) The employer should present satisfactory proof of payment and legality thereof;

2) The employer has notified the Social Security System of the confinement within 5 calendar days after the
receipt of the notice from the employee;

3) If the employer notified the Social Security System after the 5-day period from receipt of the notice from the
employee, the reimbursement shall be limited only for each day of confinement starting from the 10th calendar
day immediately preceding the date of notification to the Social Security System;

4) The Social Security System shall reimburse the employer (or pay the unemployed member) only for
confinement within the 1-year period immediately preceding the date of the filing of the claim for benefit or
reimbursement with the Social Security System, except when the member was confined in a hospital, in which
case the claim for benefit or reimbursement must be filed within one year from the last day of confinement; and

5) If the employee has given the required notice, but the employer failed to notify the Social Security System of
the confinement or to file the claim for reimbursement within the 1-year period, as a result of which, the benefit
was denied or reduced, the corresponding daily allowance he advanced to the employee, cannot be reimbursed.

PERMANENT TOTAL DISABILITY BENEFIT

When will a member be entitled to Permanent Total Disability Benefit?

Disablement to do the same or similar kind of work that the SSS member was trained for or accustomed to do
because of:

1) Complete loss of sight of both eyes;

2) Loss of two limbs at or above the ankle or wrist
3) Permanent Complete paralysis of two limbs;
4) Brain injury resulting in incurable imbecility;
5) Other cases approved by the Social Security System.
How much is the Permanent Total Disability Benefit?

1) Monthly Pension

If the member has PAID AT LEAST 36 MONTHLY CONTRIBUTIONS prior to the semester of disability.

(Pension shall be suspended upon reemployment or resumption of self-employment, upon recovery, and by failure to
undergo examination at least once a year upon notice by the SSS.)

2) Lump Sum Benefits

If the member has NOT PAID THE REQUIRED 36 MONTLY CONTRIBUTIONS.

*The lump sum equivalent to whichever is higher between:

a. The monthly pension x the number of monthly contributions paid to the Social Security System; or

b. 12 x monthly Pension

Suppose the Member who is enjoying Permanent Total Disability Benefit dies, what would be the effect?

1) His primary beneficiaries as of the date of the disability shall be entitled to receive his monthly pension; or

2) If he has no primary beneficiaries and he dies within 60 months from the start of his monthly pension, his
secondary beneficiaries shall be entitled to: a lump benefit equivalent to the balance of the five-year guaranteed
monthly pension, excluding the dependents’ pension

Suppose the Member who has already received a Lump Sum Benefit is reemployed or has resumed self-employment,
what would be the effect?

- He shall again be subject to compulsory coverage and shall be considered as a new member

PERMANENT PARTIAL DISABILITY BENEFIT

When will a member be entitled to Permanent Partial Disability Benefit?

- It is when the employee is unable to continue with his work because of complete and permanent loss of the following
part of his body:

- One thumb, index, middle, ring, little finger

- One big toe
- One hand
- One arm
- One foot
- One leg
- One ear
- Both ears
- Hearing of one ear
- Hearing of both ears
- Sight of one eye

How much is the Permanent Partial Disability Benefit?

1) Percentage of the Lump Sum Benefit

If the permanent partial disability OCCURRED BEFORE 36 MONTHLY CONTRIBUTIONS have been paid; or
2) Monthly Pension

for the periods designated in the law depending on the body part that was lost – If the member has PAID 36
CONTRIBUTIONS prior to the semester of disability.

- Little finger = 3 months

- Ring finger = 5 months
- Middle finger = 6 months
- Big toe = 6 months
- Index finger = 8 months
- One thumb = 10 months
- One ear = 10 months
- Hearing of one ear = 10 months
- Both ears = 20 months
- Sight of one eye = 25 months
- One foot = 31 months
- One hand = 39 months
- One leg = 46 months
- One arm = 50 months
- Both hearing = 50 months

Suppose the Member who is enjoying Permanent Partial Disability Benefits dies or retires, what would be the effect?

- His disability pension shall cease upon his retirement or death.

- The pension will be given in lump sum if it is payable is less than 12 months and it ceases upon retirement or death.

RETIREMENT BENEFIT

When can a Member avail of the Retirement Benefit?

Upon reaching the age of:

1) Sixty (60) years (optional retirement); or

2) Sixty-five (65) years (compulsory retirement)

How much is the Retirement Benefit?

1) Lifetime Monthly Pension

Available to those members who has paid at least 120 monthly contribution prior to the semester of his retirement.

The monthly pension of a member of who retires after the age of 60 must be higher than the monthly pension computed
at the earliest time he could have retired had he been separated from employment plus adjustments thereto or the
pension computed at the when he actually retires.

The member has the option to receive his first 18 monthly pension in lump sum discounted at a preferential rate to be
determined by the SSS. The pension shall be suspended upon reemployment of a retired member who is less than 65
years old.

2) Lump Sum Benefit equal to the Total Contributions paid by him and on his behalf

If the member who retired at the age of 60 did not pay the at least 120 monthly contribution.

When the retired member dies his primary beneficiaries as of the date of his retirement shall be entitled to receive the
monthly pension.
If he has no primary beneficiary and he dies within the 60 months from the start of his monthly pension, his secondary
beneficiaries shall be entitled to the lump sum benefit equivalent to the total monthly pensions corresponding to the
balance of the 5-year guaranteed period excluding the dependent’s pension.

DEATH BENEFIT

How much is the Death Benefit?

1) Lump Sum equivalent to: 36 x the monthly pension

If the member has paid at least 36 monthly contributions prior to the semester of death; or

2) Lump Sum equivalent to whichever is higher between:

a) the monthly pension x number of contributions paid

b) 12 x the monthly pension

If the member has not paid at least 36 monthly contributions prior to the semester of death.

Who are entitled to the Death Benefit?

1) The primary beneficiaries

2) The secondary beneficiaries (if there are no primary beneficiaries)

Who are Dependents?

1) The legal spouse entitled by law to receive support from the member;
2) The legitimate, legitimated, or legally adopted and illegitimated child who:
- is unmarried;
- not gainfully employed; and
- below 21 years old; or
- if over 21 years old, he is mentally or physically incapable of self-support
3) The parents who receive regular support from the member.

Suppose the Member, while still unmarried, designates his brothers or sisters as Beneficiaries, will they be entitled to
the Death Benefits?

- No. The brothers and sisters will not be entitled to the death benefits, even if the member failed to change the
designation of beneficiaries after his marriage. This is because death Benefits under the Social Security Law are vested
only upon the death of the member.

- Under the situation, the surviving spouse and his children would be entitled to the Death benefits. Brothers and sisters
will qualify as beneficiaries only in the absence of surviving spouse and children, or even legitimate parents.

FUNERAL BENEFIT

How much is the Funeral Benefit?

- The Funeral Benefit is 12,000 pesos payable in cash or in kind.

- Under the Social Security Act of 1997, Funeral benefit can also be availed of in case of death of a member who has
been permanently totally disabled or in case of death of a member who as retired.
COMPOSITION OF THE SOCIAL SECURITY COMMISSION

The Social Security Commission is composed of:

1) Secretary of Labor and Employment

2) Social Security System President
3) 7 Appointive Members (for a term of 3 years)
a. 3 from the worker’s group, at least 1 shall be a woman;
b. 3 from the employer’s group, at least 1 shall be a woman; and
c. 1 from the general public who has adequate knowledge and experience
regarding social security.

Can a Regional Trial Court issue Injunction against the Social Security Commission?

- No. The Regional Trial Court cannot issue writs of Injunction against the Social Security Commission because they
are co-equal in rank.

Can the Social Security Commission sue or be sued in the Regional Trial Court?

- The Social Security Commission may sue or be sued in the Regional Trial Courts only on matters connected with its
administrative functions, but not on matters connected with its quasi-judicial functions.

- Decisions of Social Security Commission, in the exercise of its quasi-judicial functions may be reviewed both upon the
law and the facts by the Court of Appeals, or if the decision involves a question of law, by the Supreme Court.
Does the Social Security Commission have Jurisdiction to award damages?

- Yes. Section 5(a) of the Social Security Act provides that the, “filing, determination and settlement of claim shall be
governed by the rules and regulations promulgated by the Commission; and the rules and regulations thus promulgated
state that the effectivity of membership in the System, as well as the final determination and settlement of claims shall
be vested in the Commission. The term “claims” is broad enough to include a claim for “damages under Section 24.”

Can the Social Security Commission Condone Penalties for late payment of Premium Contributions?

- No. The Social Security Commission has no authority to condone penalties for late payment. Being mere trustee of the
funds of the Social Security System which actually belong to the members, the Social Security Commission cannot legally
perform any acts affecting the same, including condonation of penalties that would diminish the property rights of the
owners and beneficiaries of such funds without an express or specific authority therefor.